Test 1. Identification. Write your answer on the blanks provided. 1.This business is engaged in buying goods or commodities or any form of finished products and sells these at profit. Raw Materials 2. Under this accounting assumption, the life of business is divided into equal periods wherein at the end of each period, financial statements are prepared. 3. This is a financial obligation of the enterprise which requires a fixed or tangible property to be pledged as a collateral to ensure payment. 4. These are tangible assets which are held by an enterprise for use in production or supply of goods and services, for rental to others, or for administrative purposes, and which are expected to be used during more than one period. 5. It is a financial statement that summarizes the changes in equity for a given period of time. 6. This is the result of business operation if the revenues earned are bigger than the expenses incurred. 7. These are debts or financial obligations of the business that are payable in cash or in some kind of assets. 8. These are the means by which the information accumulated and processed in financial accounting are periodically communicated to various users. 9. This is the combined concept of revenue recognition and expense recognition principles. 10. This is an accounting period which begins January 1 and ends on December 31 of the same year. 11. It is the simplest form of business organization where capital is provided by one person. 12. This is the portion of the cost of property and equipment or fixed assets that has expired based on rational and systematic allocation procedure. 13. This is an accounting assumption which states that the business has a continuous life of existence. When it starts, it is assumed that it will continue to operate for an indefinite period of time. 14. This is the account title for a financial obligation of an enterprise that constitutes an oral or verbal promise to pay. 15. This is the account title for money placed and set aside for small expenses